Competitiveness Tax Credit Act

Competitiveness Tax Credit Act - Amends the Internal Revenue Code to allow an investment tax credit for manufacturing and other productive equipment based upon a determination of the domestic origin of such property.

Makes such credit applicable for the two-year period beginning on the date of enactment of this Act.

 
HR 4187 IH
102d CONGRESS
2d Session
 H. R. 4187
To amend the Internal Revenue Code of 1986 to encourage immediate investments
in new manufacturing and other productive equipment by temporarily allowing an
investment tax credit to taxpayers who increase the amount of such investments.
IN THE HOUSE OF REPRESENTATIVES
February 5, 1992
Mr. RIDGE introduced the following bill; which was referred to the Committee
on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to encourage immediate investments
in new manufacturing and other productive equipment by temporarily allowing an
investment tax credit to taxpayers who increase the amount of such investments.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. SHORT TITLE.
  This Act may be cited as the `Competitiveness Tax Credit Act'.
SEC. 2. TEMPORARY INVESTMENT CREDIT FOR NEW MANUFACTURING AND OTHER PRODUCTIVE
EQUIPMENT.
  (a) ALLOWANCE OF CREDIT- Section 46 of the Internal Revenue Code of 1986
  (relating to amount of investment credit) is amended by striking `and' at
  the end of paragraph (2), by striking the period at the end of paragraph (3)
  and inserting `, and', and by adding at the end the following new paragraph:
  `(4) the manufacturing and other productive equipment credit.'
  (b) AMOUNT OF CREDIT- Section 48 of such Code is amended by adding at the
  end the following new subsection:
  `(c) Manufacturing and Other Productive Equipment Credit-
  `(1) IN GENERAL- For purposes of section 46, the manufacturing and other
  productive equipment credit for any taxable year is an amount equal to
  the sum of--
  `(A) the domestic equipment credit, and
  `(B) the nondomestic equipment credit.
  `(2) AMOUNT OF DOMESTIC AND NONDOMESTIC EQUIPMENT CREDITS- For purposes
  of this subsection--
  `(A) Domestic equipment credit-
  `(i) IN GENERAL- The domestic equipment credit for any taxable year is 10
  percent of the amount equal to the product of--
  `(I) the domestic equipment ratio, and
  `(II) the qualified increase amount.
  `(ii) DOMESTIC EQUIPMENT RATIO- The domestic equipment ratio for any
  taxable year is a fraction in which--
  `(I) the numerator is the aggregate bases of the qualified manufacturing
  and other productive equipment properties placed in service during such
  taxable year which are of domestic origin, and
  `(II) the denominator is the aggregate bases of all qualified manufacturing
  and other productive equipment properties placed in service during such
  taxable year.
  `(B) Nondomestic equipment credit-
  `(i) IN GENERAL- The nondomestic equipment credit for any taxable year is
  7 percent of the amount equal to the product of--
  `(I) the nondomestic equipment ratio, and
  `(II) the qualified increase amount.
  `(ii) NONDOMESTIC EQUIPMENT RATIO- The nondomestic equipment ratio for
  any taxable year is a fraction in which--
  `(I) the numerator is the aggregate bases of the qualified manufacturing
  and other productive equipment properties placed in service during such
  taxable year which are not of domestic origin, and
  `(II) the denominator is the aggregate bases of all qualified manufacturing
  and other productuve equipment properties placed in service during such
  taxable year.
  `(C) Determination of domestic origin-
  `(i) IN GENERAL- Property shall be treated as being of domestic origin
  only if--
  `(I) the property was completed in the United States, and
  `(II) at least 50 percent of the basis of the property is attributable to
  value added within the United States.
  `(ii) UNITED STATES- The term `United States' includes the Commonwealth
  of Puerto Rico and the possessions of the United States.
  `(3) QUALIFIED MANUFACTURING AND OTHER PRODUCTIVE EQUIPMENT PROPERTY-
  For purposes of this subsection--
  `(A) IN GENERAL- The term `qualified manufacturing and other productive
  equipment property' means any property--
  `(i) which is used as an integral part of the manufacture or production of
  tangible personal property and increases the efficiency of the manufacturing
  or production process;
  `(ii) which is tangible property to which section 168 applies, other than
  3-year property (within the meaning of section 168(e)),
  `(iii) which is section 1245 property (as defined in section 1245(a)(3)), and
  `(iv)(I) the construction, reconstruction, or erection of which is completed
  by the taxpayer, or
  `(II) which is acquired by the taxpayer, if the original use of such
  property commences with the taxpayer.
  `(B) SPECIAL RULE FOR COMPUTER SOFTWARE- In the case of any computer
  software--
  `(i) which is used to control or monitor a manufacturing or production
  process,
  `(ii) which increases the efficiency of the manufacturing or production
  process, and
  `(iii) with respect to which depreciation (or amortization in lieu of
  depreciation) is allowable,
such software shall be treated as qualified manufacturing and other productive
equipment property.
  `(4) QUALIFIED INCREASE AMOUNT- For purposes of this subsection--
  `(A) IN GENERAL- The term `qualified increase amount' means the excess
  (if any) of--
  `(i) the aggregate bases of qualified manufacturing and other productive
  equipment properties placed in service during the taxable year, over
  `(ii) the base amount.
  `(B) BASE AMOUNT- The term `base amount' means the product of--
  `(i) the fixed-base percentage, and
  `(ii) the average annual gross receipts of the taxpayer for the 4 taxable
  years preceding the taxable year for which the credit is being determined
  (in this subsection referred to as the `credit year').
  `(C) MINIMUM BASE AMOUNT- In no event shall the base amount be less than
  50 percent of the amount determined under subparagraph (A)(i).
  `(D) Fixed-base percentage-
  `(i) IN GENERAL- The fixed-base percentage is the percentage which the
  aggregate amounts described in subparagraph (A)(i) for taxable years
  beginning after December 31, 1986, and before January 1, 1992, is of the
  aggregate gross receipts of the taxpayer for such taxable years.
  `(ii) ROUNDING- The percentages determined under clause (i) shall be
  rounded to the nearest  1/100  of 1 percent.
  `(E) OTHER RULES- Rules similar to the rules of paragraphs (4) and (5)
  of section 41(c) shall apply for purposes of this paragraph.
  `(5) COORDINATION WITH OTHER CREDITS- This subsection shall not apply to
  any property to which the energy credit or rehabilitation credit would
  apply unless the taxpayer elects to waive the application of such credits
  to such property.
  `(6) CERTAIN PROGRESS EXPENDITURE RULES MADE APPLICABLE- Rules similar to
  rules of subsections (c)(4) and (d) of section 46 (as in effect on the day
  before the date of the enactment of the Revenue Reconciliation Act of 1990)
  shall apply for purposes of this subsection.
  `(7) TERMINATION DATE- This subsection shall not apply to any property
  placed in service after the expiration of the 2-year period beginning on
  the date of the enactment of this Act.'
  (c) Technical Amendments-
  (1) Clause (ii) of section 49(a)(1)(C) of such Code is amended by inserting
  `or qualified manufacturing and other productive equipment property' after
  `energy property'.
  (2) Subparagraph (E) of section 50(a)(2) of such Code is amended by inserting
  `or 48(c)(6)' before the period at the end.
  (3)(A) The section heading for section 48 of such Code is amended to read
  as follows:
`SEC. 48. OTHER CREDITS.'
  (B) The table of sections for subpart E of part IV of subchapter A of
  chapter 1 of such Code is amended by striking the item relating to section
  48 and inserting the following:
`Sec. 48. Other credits.'
  (d) EFFECTIVE DATE- The amendments made by this section shall apply to--
  (1) property acquired by the taxpayer after the date of the enactment of
  this Act, and
  (2) property the construction, reconstruction, or erection of which is
  completed by the taxpayer after the date of the enactment of this Act,
  but only to the extent of the basis thereof attributable to construction,
  reconstruction, or erection after such date.